By Chris Hogg BBC Health Correspondent

He told me that it is clear that money earmarked for IT in the past has been siphoned off for other projects and as a result the NHS is falling behind when it should be steaming ahead.

Mr Milburn has promised to publish a major new IT strategy this summer.

However, many of those within the NHS are not convinced that yet another rethink has any more chance of working than the previous ones.

X-ray system

Without putting in that resource you neither buy the right equipment nor more importantly can you pay for the right quality of people to implement it

Trevor Campbell Davis

North Durham Hospitals NHS Trust is one of those heading the way in making innovative use of new technology. It has invested millions in a hi-tech digital x-ray system.

Seconds after the x-ray is taken in another part of the hospital the consultant radiologist Dr Shri Desai can make his diagnosis from the image on his computer screen.

Dr Desai is a big fan of the system.

"It has made my life very simple. The images are never lost. All the previous images are there at the touch of a button.

"The patients are getting their report faster and the quality of the care which the patient gets from our reporting has definitely enhanced."

However, finding the right system for the hospital wasn't easy.

A team of doctors, computer experts and managers travelled the world looking at the different options.

But so far none of the other NHS Trusts in the area have the system, so Durham can't yet use it to share information with doctors in other hospitals or to get a second opinion on a difficult case.

Poor communications

Our GP practice doesn't electronically speak to anyone else effectively except our own practice

Dr Howard Freeman

Elsewhere the problem is even worse. Some hospitals are unable to carry out the simplest tasks that business would take for granted, such as communicating with other organisations by email.

Dr Howard Freeman is a family doctor in South West London. His practice has spent a lot of money on IT.

But that is not much use when no-one else in your area has.

Dr Freeman told me: "Our GP practice doesn't electronically speak to anyone else effectively except our own practice.

"If you've been to see a doctor at a hospital they will generate a computerised letter which the hospital will print out, post to us, and we have to scan back into the system and attach it to the patient's computerised file as well as attaching it to the patients' paper file for onward transmission to the next doctor."

One practice employee has to spend virtually all day scanning letters from hospitals, insurance companies and other practices into the computer.

Money spent on that post could be better spent on patient care if the NHS got better at communicating electronically.

Patchy progress

Mr Milburn recognises that progress in this field has been at best patchy.

He said: "It's pretty fragmented and pretty piecemeal to tell you the truth.

"Money has been put in, but because IT is way down the list of immediate priorities it always falls off the list.

"As a consequence you've got the National Health Service falling behind in terms of our IT investment when it should actually be steaming ahead."

Managers, however, say it's not their fault. For a start until recently the money allocated by the Department of health was nothing compared to the amount the private sector spent on information technology.

Trevor Campbell Davis is vice-chairman of the managers' organisation, the NHS Confederation.

He said: "The health service spends a small amount of its budget on IT.

"The commercial sector - which I've also got experience of - typically spends four times the amount of money we do.

"Without putting in that resource you neither buy the right equipment nor more importantly can you pay for the right quality of people to implement it."

Signs of improvement

At long last that looks as though it is changing.

Along with the extra money the government is promising a more centralised approach to IT to try to tackle the problem of local systems which don't talk to each other.

Steven Critchlow has spent the last decade building up a business which supplies the NHS with software and hardware systems.

He is not convinced the new approach will work.

"I think there are islands of decision making where they don't understand the consequences of all the decisions that they're making.

"The internet was never planned. It just happened and responded to people's needs.

"Whereas the NHS believe that they can dictate policy from the centre in a very very complex environment and I don't believe it's possible."

The stakes this time are pretty high. On budget day ministers were warned that future investment in the NHS would be wasted if the service didn't sort out its information technology.

The question is do we have the right people, the right suppliers and the right products in this country to make a real difference to this huge organisation? The suspicion is that we don't.